The Art of the Layoff

We’re in a bubble again. It’s not as frothy as last time, but hallelujah, this time we know what to do, right? One good thing about the dotcom implosion in 2000 is that we got lots of practice laying people off, and I’m afraid that this valuable knowledge may get lost.

If you are scoffing (“Guy’s clueless: We’ll never downsize because we’re growing so fast.”), then you’re my intended reader.

Take responsibility. Ultimately, it is the CEO’s decision to make the cuts, so don’t blame it on the board of directors, market conditions, competition, or whatever else. In effect, she should simply say, “I’m the orifice. I made the decision. This is what we’re going to do.” If you don’t have the courage to do this, don’t be a CEO. Now, more than ever, the company will need a leader, and leaders accept responsibility.

Cut deep and cut once. Management usually believes that things will get better soon, so it cuts the smallest number of people in anticipation of a miracle. Most of the time the miracle doesn’t materialize, and the company ends up making multiple cuts.

Given the choice, you should cut too deeply and risk the high-quality problem of having to rehire. If nothing else, it enables you to declare victory: “We’ve turned things around and we’re hiring again.” By contrast, multiple cuts are terrible for the morale of the employees who have not been laid off.

Move fast. One hour after your management team discusses the need to layoff employees, the entire company will know that something is happening. If you think you need to layoff people, then do so because it’s unlikely that a miracle will happen. Once people “know” a layoff is coming, productivity drops like a rock. You’re either laying people off or you’re not—you should avoid the state of “considering” a layoff.

Clean house. Painful as it may be, a layoff is a good time to terminate marginal employees. It’s good for the company because it can take care of many personnel issues at once without having to differentiate between people who aren’t performing and positions that you’re eliminating. It’s good for the marginal employee because he’s not tainted with getting fired. Finally, it’s good for the employees who remain because they can see that you have a clue about who’s performing and who isn’t—assuming you’re not clueless in making decisions.

Whack “Freddy.” Most executive have hired a friend, a friend of a friend, or a relative as a favor. When a layoff happens, all the employees will be looking to see what happens to “Freddy.” “Did he survive the cut or did he go? Is it cronyism or competence that counts at the company?” It should be true that Fred is dead.

Share the pain. When people around you are losing their jobs, you can share the pain too. Take a smaller office. Turn in the company car. Reassign your personal assistant to a revenue generating position. Fly coach. Stay in motels. Sell the box tickets to the ball game. Give your thirty-inch, flat-panel display to a programmer who could use it to debug faster. Do something, however symbolic.

Show consistency. I cannot understand how companies can claim that they have to cut costs and then provide severance packages of six months to a year of salary. You would think that if they wanted to conserve cash, they’d give tiny severance packages. Typically, there are three lines of reasoning for generous severance packages:

Cutting headcount, even with severance packages, is cheaper than keeping the employee around indefinitely, and we don’t want any lawsuits.

We have lots of cash, so our balance sheet is strong, but we need to cut heads to make our profit and loss statement look better.

Wall Street (or your investors) is expecting dramatic actions, so we need to do this to show the analysts that we’ve got what it takes to be a leader.

None of these reasons makes sense to me. If you need to do a layoff to cut costs (and conserve cash), then provide minimal severance packages, cut costs as much as you can, conserve as much cash as you can. If nothing else, it’s a consistent story.

Don’t ask for pity. Sometimes managers go to great lengths to show the person they’re laying off (or firing) how hard it is on them. This reminds me of the old definition of chutzpah: a boy murders his parents and then asks the court for leniency because he’s an orphan. The person who suffers is the one being terminated, not the manager.

Provide support. The odds are the people getting laid off aren’t “at fault.” More likely, it was the fault of top management—the same top management with golden parachutes. Hence, you have a moral obligation to provide services like job counseling, resume writing assistance, and job search help. There are firms that specialize in helping employees during “transitions,” so use them.

Don’t let people self select. We had a joke at Apple during the dark days of the late eighties that went like this: We should announce that employees who want to quit should come to a big meeting. Those who wanted to stay at the company should not attend. Then we would let the people go who didn’t attend the meeting and keep the ones who wanted to quit—because they were smart enough to know that we were in bad shape or that they had better opportunities elsewhere.

The point is that if you let people choose to get laid off or retire, you might lose your best people. Deciding who to layoff should be a proactive decision: Select the go-forward team to ensure that you never have to lay people off again. You should not leave this to chance.

Show people the door. With few exceptions, all you should do is let people finish the day—maybe the week. (My theory is that Friday is the best day to do a layoff because it lets people have a weekend to decompress.) Showing people the door seems inhumane, but it’s better for both the people leaving and the people remaining.

Move forward. Let people say goodbye and then get going. This is when leadership counts because any yoyo can run the show in good times. It’s bad times when you separate the men from the boys and the women from the girls.

After the layoff, this is what the remaining employees will be wondering about:

Guilt: “Why did I survive the cut and my colleagues didn’t?”

Future of my job: “Will I survive the next round of cuts if there are more cuts?”

Future of the company: “Will the company survive at all?”

So you need to set, or re-emphasize, goals, explain what everyone needs to do to get there, and get going because the best way to move beyond a layoff is to get back to work.

Circulate with the troops. You might want to retreat to your office, turn off the phones, stop answering emails, and avoid everyone. This would be the worst actions to take. This is the time for you to motivate by walking around. Employees need to see you, talk to you, and seek your help and advice. They don’t want to think their leader is cowering in some foxhole. The brave face that you put on may be a charade, but it’s an important charade.

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Guy Kawasaki is the chief evangelist of Canva, an online graphic design tool. Formerly, he was an advisor to the Motorola business unit of Google and chief evangelist of Apple. He is also the author of The Art of Social Media, The Art of the Start, APE: Author, Publisher, Entrepreneur, Enchantment, and nine other books. Kawasaki has a BA from Stanford University and an MBA from UCLA as well as an honorary doctorate from Babson College.

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53 Comments

What about the PR involved in doing layoffs. It hurts your image as a company. While I agree that from a financial perspective giving small severance packages is the right thing to do, you have to keep in mind that you’re seriously altering the lives of the people you’re letting go. The media certainly will.
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Are you saying that you think the media will be kinder to you if you give larger severance packages? I disagree. The media is going to do what it’s going to do. The size of the severance package has little to do with its reaction. In fact, large packages to executives will exacerbate the situation.
Guy

Unless the CEO is he techno wizard founder their head should be put on a pike by the front door or primary parking lot entrance as testament to the risks of bad management and proof that the best person to lay-off is the lame ass, suit with manicured fingernails who hasn’t done a whit of real work since he last parked cars at Il’ Fornai.
Salaries and most of all exec perks are so out of kilter in the Valley that if you’re in media, it’s hard not to write about it.
It’s always been oddly interesting to me that Silicon Valley is one of the few locales: where the press forgets that its job is to report on the parade, not be the drum major of massed marching bands; unlike most industries when someone screws up royally and cost a company millions of dollars they’re shown the highway leading to their next position selling time shares in Squaw Valley. howver in The Valley they and their bad management skills are constantly recycled.
Darwinism needs to be put back in place in the Valley. Open up the gene pool to new life and put the losers on the path to extinction. Our brothers’ and sisters’ retirement funds (which are much of foundation for risk capital) will be better for it.
Best,
Jim Forbes
curmedgeonly and comfortably retired in Escondido, CA.
**********************
Jim,
Tell us how you really feel! 🙂 I fixed two typos for you.
Guy

I’d add the importance of demonstrating a clean logic behind the layoff decision. In 99% of cases it’s to save money. Then the management should explain how the cut will save the company, compare current burning rate to the expected one and convince that it makes sense. When there are 10 VP in California it makes a little sense to fire 3 developers in India. A layoff is done for the company (read – for the people that left, not those that leave). Nothing undermines trust as BS instead of clear explanations of any decisions, especially such a critical as a layoff.
Another thing is consistency. Once a decision is declared the management has to go the whole nine yards and make it done as it was announced. I know a case when a manager was fired (in a wide range of other employees) and it was publicly announced but a few days later the manager was re-hired because she had some secret tricks to influence the boss. The trust to the management was lost forever.

I’ve been through one of these as a dot-com employee, although I survived the layoff. If you’re a CEO in the situation with a startup where you have to do layoffs, it’s because you, the CEO, blew it. If you didn’t take money or a customer you could have, and the troops know it, and then you have to do layoffs because the VC can’t give you more money, it’s all on you. If you don’t have a plan to pay for your employees a year or two out, you’re the dumb-shitake. My recommendation would be to just quit and let the investors appoint a new CEO.
The personal disruption of a layoff is huge. At a startup, if you have good people, some more than likely came from much more secure jobs. Some sold houses and moved to new communities or countries. Often times, they follow people they trust to your company. These might not be your “Freds”, but other people’s “Freds”. When you as a CEO lay them off, you have also clobbered the credibility of the people who recruited them, and they will hate you for that.
As for if you get canned in a layoff. Make a beeline for a direct competitor. Most non-competes, if you were suckered into signing one, have clauses that require the employer to pay you if terminated to not work for a competitor for a particular period of time. Discuss the non-compete with the competitor, get an offer, and hit your old employer up for free money. Be part of the solution. The more people who get even, the less this kind of crap bred from incompetent management will happen. VCs will be more conservative about the responsibilities of their portfolio firms going on hiring binges. Also, sign nothing (severance agreement, etc.) until you can have a lawyer review it. A company that pressures you into signing such things immediately is digging a legal hole to China. If they have to cut people, they are in no financial position to bully the people they have to cut.
I really disagree with the second paragraph of (2). If you do layoffs, plan to not hire again for at least 6 months. Any new hire will be seen as a “trade” from any arbitrary layed off employee. If my dot-com’s layoff situation, the new hires came in less than a month after the layoff. Turns out they were worthless dorks who spun a story of bringing customers and revenue to the company. Imagine your worst customer support recurring nightmare suddenly having desks in your office. Many of us saw them as a trade for two very valuable co-workers.
I am reminded of the old Japanese business executive tradition of committing suicide when he screws up and has to lay people off. It’s pretty harsh, but given a one-or-the-choice between that and (12) plus (13) above, I think the Japanese way probably serves companies better. The lousy leader leaves.
Oh yeah, five years after a layoff I survived, it still fills my throat with bile ;-).

If CEOs had any integrity, when they called for layoffs, they’d let themselves go, too.
After all, if you’re going to take responsibility, then you need to take the ultimate responsibility. It doesn’t make any sense to fire a whole squad of people, say you’re “responsible,” and retain your job. It’s your fault, anyway.

I disagree that letting employees go on a Friday is a good thing. You want that employee to have access to professional and legal assistance right away and not have to stew over the weekend. Many will want to get the word out, seek legal advice, financial advice and personal advice while it’s available during weekdays from a professional. Having to endure a weekend of pain won’t let them decompress IMHO.

IMHO…
1. People want to know reasons too.
2. Cutting once might not be financially optimal (although I agree that it is emotionally optimal for the remaining workers). Has anyone tried to quantify the cost of declining employee morale vs. rehiring cost? Can keeping others on make them work harder (the fear motivator)? Anyway, management can never guarantee that there won’t be more layoffs, due to e.g. the reasons in your point #1.
7. Another reason: the employees are unionized.
8. Managers can suffer too, when they are forced to layoff below critical mass by higher-ups, sometimes at non-optimal times wrt project schedules.
10. Back in 1992 I was allowed to choose between a generous package or staying behind ’til the next layoff wave, with a possibly smaller package… everyone knew the company was going under anyway, so the choice was obvious. I appreciated being given the choice. Under such circumstances, good people will probably leave anyway.
A similar situation occured recently, and because I believed in the company I chose to stay, and survived.

Guy – I really need your help with number 7. I agree that consistency is important – but I consider consistency BETWEEN severence packages to be the issue. I have never been laid off (just lucky I guess), but I’ve watched many where “the little guys” get nothing in the way of severence and the executives walk off with a year’s salary! As long as the package parameters, whatever they are, apply to everyone – I can swallow this. If they don’t, I really can’t.
Other than that – this list is brilliant!
************
Ann,
Yes, there’s that issue of consistency too. The consistency I’m addressing is where a company says it has to reduce costs but then spends $500 million in severance. This, I just don’t get.
Consistency between packages, as you point out, is very important too.
Thanks!
Guy

Hi GK, how do you know that we’re in a bubble again? Just for my information what’s creating this bubble this time around.
******************
If you could see some of the deals that are coming in these days, you’d understand why I think we’re in a bubble again!
What’s creating it? The innate human desire to innovate. It’s just that not all innovation will work out.
Guy

To those saying the CEO should fire themselves if the company needs to do some cuts – it really depends on the situation.
If it was something outside of the control of the CEO that lead to things going downhill, that is the worst thing that can be done – you don’t throw the captain overboard because the wind changed direction… nobody will be left to steer the ship.
If the reasons for the downsizing was due to executive level incompetence, by all means, off with their heads – and no severance should be given nor expected.
I must say though, firing should only be done by the CEO, face to face, privately with the employee in their office – the people on the chopping block have invested time and energy towards your dreams, the least you can do is respect what they are and will be going through. It is a traumatic experience no matter how you do it most of the time.
I have fired people who worked for me in the past due to changing market conditions… it’s very hard to do but must sometimes be done… for me it was equivalent to choosing to cut a foot off or hoping the gangrene will go away on its own (which it rarely does).
Jon
Founder of myfoodcount.com
Free & Anonymous Health Monitoring
life: jon.legendarylife.com

Large packages to executives, yes. Giving the average employee a chance to get back on their feet, seems like a compasionate move to me.
Maybe it’s too idealistic, but I believe that if you invest in people, even those you’re letting go, things will work out for the best. If you “give the shaft” to your former employees, they’ll take every opportunity to bad mouth the company, and you can forget about hiring any of them back in a rebound (assuming they’re not part of a house cleaning).
I agree with ann, the better way to go is probably consistency over generosity. Giving everyone a fair deal may still leave some hard feelings, but is easier to defend in the public eye.
You’re probably right about the media Guy. I was thinking more about the “small-town-everybody-working-for-a-single-employer” type of setup, that probably doesn’t happen much anymore though.
Love the discussion on this site…

I’d add that management should be cut in proportion to other cuts. During the last bursting bubble, one of the things that I noticed in the company that I worked for at the time was that they did everything possible to protect middle management and above and consistently only cut the do-ers in the organisation. And then sat around like jerks wondering why their overhead was so high. There was no consistency and absolutely no fairness.
This may have come from working for a larger company– the order came down from HQ to cut, and the only thing that they were measured on was how many heads went away– nothing more.

Great post Guy, nice to see that you still have some “Art of the …”-lists up your sleeve.
Some time ago I read the story of a Belgian CEO in a Silicon Valley company. When bad times came he reduced salaries instead of laying people off, starting with a big cut in his own salary. When the market geared up again he still had his people and was able to respond faster and win market share.

Guy Kawasaki has just posted about The Art of the Layoff and he starts with a simple little statement:
We’re in a bubble again.
Guy then goes through 13 great points, well as long as youre not employed by a bubble company, some a…

lot of good points especially the one about cut once and cut deep. However, in our litigous times it pays to have a good employment lawyer and to be and to have been consistent in your policies in regards to layoffs/redundancies and outright dismissals for cause. if you have operations outside the US then be prepared for the complexities of that situation as well – especially in locales where the labor laws will force you to pay more severance (if you are lucky) than your US employees. And also being un-PC, you will have to make EEOC calculations whether you like it or not. sorry but that is the way of this world.

Once again, im writing about Guys entry on The Art of Layoff.
Im just starting up so the only person I can fire really is myself, but its a great read to prepare myself for that day. Just to summarise whats the esse…

One more thing: Don’t delegate this job more than necessary. If you can meet every single laid off employee and tell them personally, do it. Only when that’s impossible should you let someone else do it.
To have to tell people is a lousy job, and you do not want your staff to think you’re a weasel as well as an orifice. One of them is bad enough.

I have always had mixed feelings on layoffs. I have survived a few in my time and at some point, my luck will run out. That said, layoffs, in my experience, come into the following categories
1a. Cost Cutting – you got big too quickly. This is probably the one that you are refering to here. Downsizing in such a scenario is something that, if done well, is a prudent way to do things, right the ship and move on
1b. Cost Cutting – making the numbers work. Too many companies will trim people (note that its not always excess fat) with the shortsighted idea that once the costs are down, growth will follow. I have yet to see sustainable growth return with this option in all the layoffs I have seen around my industry.
2. It just ain’t our day – Companies get a bad FDA ruling. Nothing you can really do about it. Drastic cuts are about the only way forward for many companies. Some use it to their advantage. They go back to the drawing board, pull up their socks and jump onto the next challenge with a smaller, motivated staff. The results can be very good. Others mismanage the downsizing, treat it like the end of the world and never recover
3. Bad management – I agree with some here. If consistently bad management necessitates downsizing, the buck stops at the top. The leadership must take responsibility.

In regards to #10, a company is going to lose top talent regardless. When a layoff or even the rumors of a layoff occur, anyone that’s been around knows enough to start networking immediately, and if you happen to get a better offer, it’s considered best practice to take the offer rather than try for a counter offer from your current employer.
In some cases, the layoff doesn’t eliminate only dead wood. Whole divisions can get laid off and there’s no room to keep the top performers. I’ve seen extremely talented individuals know that a layoff was coming and time it perfectly where they had a new job lined up and got the package as well.
After having experienced the rollercoaster of the high tech industry, I’ve overcome some of the naiveté of youth and live by 5 simple rules regarding employment.
1) God and Family first, then everything else.
2) I have as much trust and faith in the company I work for as the company has in me.
3) The company is an entity whose primary goal is to make money.
4) I as an individual have a primary goal of making money for my family.
5) I will work for the company for as long as they pay me or at least until I get a better offer.

Been laid off, scooped the severance (no claw back) and was working the next day.
Why?
Because execs announced a 20% cut two months in advance with a firm date. 20% meant cutting to core and I was a project person.
Unfortunately, the project people were also the movers and shakers, the risk takers, the I-have-skills-so-I-can-take-risks-with-my-career group.
The company tried to hire me back the next day (in another division) but like I said I (and almost everyone else) was already working.
The Lesson?
Don’t automatically cut project people.

Excellent post, Guy. “Sharing the pain,” even symbolically, is all too often overlooked, but it goes a long, long way in deepening the relationship between the management and those employees who’ve survived the cut.

I will have to disagree with number 7, not that it doesn’t use capital, it clearly does.
My argument for humane severance packaging is this.
1. dont screw the employee because you the manager screwed up the business model and the funding. they in all likelihood cannot afford a few missed paychecks as well as you can.
2. Everyone is watching. anyone who did not get fired has their finger on the dice.com/monster.com/careerbuilder.com “Submit” button. You arent just firing employees or co-workers, you are firing thier friends, buddies, lunch crew etc. They know thier kids names, and will stay in touch afterwards. if you show them that you did number one above, it doesn’t take a lot of imagination for someone to see the same thing happening to them. *CLICK* now you have lost the people you wanted to keep.
3. you may need to hire them back. I have personally seen this, where some critical unaccounted for process was entirely cut out. It may have been something that only had to be done once a month and 3 people knew how to do it, but all three of them got fired. you need to keep the good Karma open in case you need to come back to them and beg for help.
4. Not only are current employees watching, but so are all future employees. did you see the one about the company that gave out Ipods, then asked people to give them back two weeks later when they got laid off. who wants that press?

I agree with a more generous severance package. It says something for the years people have given their lives to the company.
I also agree management should take a paycut. Personally I like the corporate wide paycut that some companies have done in the past. It takes guts to keep people on when other companies are ditching people like they don’t matter any more.

Excellent post Guy!
I have to agree with frumiousb. I worked in a place where we had a few waves of layoffs. First it was to pare down and “make the place profitable” – and in the dot com bubble that sometimes literally meant pennies of profitability!
In the next few rounds (and that slow repetitive death is a total drag to say the least), they got rid of the workers – developers, engineers and customer service people. As people left, the rest of us were left trying to do the same amount of work with fewer and fewer people. And the end result was that there was no one to develop and grow new services and products and no one to support the existing product or fix anything that broke. We all know what happens then!
Meanwhile, most of us were torn between trying to find new work and trying to hold on where we were, while not feeling very enthused or loyal.
Cutting deadwood and excesses is good. Cutting the people who actually do work is pretty darn bad.
Bottom line on the company where I worked — they consolidated the productive but remotely located part of the company to the high rent admin location. Paid severence etc to those of us who couldn’t go. Paid bonuses, stock options etc to those who did. Within 9 months more than 50 per cent of those who moved had been escorted to their cars in a sudden “layoff”. The company still limps along but no one in the industry really cares about them anymore.

This is one of your best posts ever, Guy. There’s no good way to sack people but there is a right way. I hope to god the people who are deluding themselves now about the coming need for layoffs have the guts to follow your advice when the time comes.

Great post Guy. One thing I have always been a believer in is practising an open book policy with all employees.
By that I mean, at all times every employee of the company should know how we are doing. If sales aren’t coming in, and people know our burn rate, there should be no surprises when the day of lay offs come.
This helps soften the blow, and gives everyone a chance to make adjustments accordingly.
Thanks for the post.

Excellent post Guy – having recently been made redundant myself I find myself agreeing with most of your points. It’s not the end of the world (despite people thinking so) and often (certainly in my case) turned out to be a blessing in disguise.
What you talk about is for leaders to be humble and take responsibility
http://www.digitaldigressions.net/blog/2006/07/humble_leaders_.html
and this we see far too seldom. It feels ok to leave a company when the leaders have that stance rather than being a bunch of cronies just laying people off, because they don’t have the strategic nouse to save money in any other way.

Toward the end of the .com bust, Our Company went through 6 or so layoffs to go from 300 plus to less than 60 about a year. (I got shown the door around 80) So two points,
A) fewer layoffs would have been better. but,
B) we got pretty good at the timing of the
layoff with all that practice.
First, the layoff happened before noon.
Next, Everyone was called into the managers office to be told their status. That way nobody got that look when the phone rang or tap on the shoulder.
Employees that were retained were told to take a long lunch and report back around 2 or 3 for the “state of the union” all-hands meeting. Employees that were let go had Manager/HR access (to go over the termination package, coverage etc.) and given a little time to clear out the office only with other people going through the same experience.
Retained and Terminated Employees knew which Sports Bar to meet up for the long lunch were they could “contructively talk”
about the current situation.
This worked pretty well until it happened to me and found out that no matter what the process, the “I’ve-been-punched-in-the-gut feeling” is still there big time.

Former Apple exec, author of The Art of the Start, and venture captialist Guy Kawasaki, whose blog has great tips for start-ups, technology companies, and business people says in a post today that we’re in a bubble again and advises comp…

Former Apple exec, author of The Art of the Start, and venture captialist Guy Kawasaki, whose blog has great tips for start-ups, technology companies, and business people says in a post today that we’re in a bubble again and advises comp…

Guy … excellent post. Few things I noticed that made a 100% sense.
As a CEO, one needs to be tough, and at the same time leave a “good” taste in someones mouth.
It’s all about how you make people feel AFTER you’ve interacted with them.

Your advice on lay-offs is relevant and timely. The sad thing is a number (more than we think) of CEOs are poor leaders. Therefore when the times get rough they will more than likely embrace the twenty-first century trinity; me, myself and I. This creates a vacum for those that follow.
I guess leadership isn’t a soft skill after all.

I wouldn’t lay people off on Friday. According to something I read years ago, firing/laying off on Friday causes people with psychological problems to go over the edge without the ability to get help quickly. Doing it during the week allows them time to talk with HR professionals, mental health people and you, if necessary, to plot a course of next actions. I’ve always followed this path and it seems to have worked well with me.

Part of being an ethical leader is giving people warning of what might happen. Layoffs may be necessary, but they should never, ever, ever be a surprise. Employees should know months in advance of any possible layoffs that now might not be a good time to buy a new car, or a house, or whatever.
Since being a CEO is essentially the financial equivalent of winning a lottery these days, token symbolic gestures like moving into a smaller office don’t impress me one bit. Even firing a CEO doesn’t impress me because they all get huge financial bonuses for being terminated. In short, the only CEO behavior that might impress me is ethical behavior.

The company I work for lays off people who really do the work — developers and testers. Then retains first-and-second-line-do-nothing managers in two ways: demoting them to “contributor” positions, or just keep them where they are.

Guy Kawasaki at his sensational blog discusses in a great post the Art of the Layoff as only he can with a top-13 list. I only have a couple of comments on what Guy has said. First, Guy says with few exceptions, all you should do is let people finish

Guy –
I’ve read that laying off or firing anyone on a Friday is not a good thing. Yes, it gives them the weekend to decompress, but it also kills their weekend and makes you look like the bad guy. What if they have a birthday party for their 3 year old planned (or any other number of events). The layoff/firing muddies their weekend and makes your company look – in their mind – like the bad guy. Unfortunately most HR departments recommend layoff/firing on Friday because it’s easy to deal with the salary and accounting issues this way.
However – psychologically, it is better to do it on Monday. This lets people have a full business week to organize their needs – with both your HR department, and with their local unemployment agency. Questions about continuing coverage, severence and such can be answered in a timely manner, rather than stewing over the weekend.
I truly wish most employers would adopt this tact – Monday is the best day to let someone go from their job.
–*Rob

Intel managers facing layoffs should look at the 3 Keys for Taking Control and other advice on my web site, Fallback Position. Unless you own the company, you need a Fallback Position. According to CNET News.com, Intel is cutting 1000 management jobs …

If you have to cut costs, why not cut everyone’s salaries, CEO on down, about 15% and go to a four-day work week? You would get some attrition from people who are over-extended financially (or were close to it), and those who stay would probably come to work on that “free” day anyway when needed.

#9 is too often overlooked. I’m glad you included it in the list.
Dev makes a good point, by the way, though I wouldn’t go quite that far. Giving up a big chunk of their earnings and inserting it into the “ailing” company as a mea culpa might go a long way towards showing their stakeholders and employees that they accept responsibility for a mistake that was really theirs in the first place. Call it a “character tax”.

#12 A great example of what to do.
However, when the polar opposite occurs; when upper management keeps a tight lid on everything here are a few things that happen to the people that didn’t get fired once they get over the “why didn’t I get the axe over the other person” type of thinking.
A. Productivity sinks to “just enough to get by” level.
B. The people that are smart, update their resume’s, step up their networking and do their best to get out before the company decides to make even more cuts. Unless of course the already saw it coming and prepared for it.
Chances are (which is the case with me) that the company is or was doing well but somewhere down the line a VP made a few bad decisions, realized them and made up for it with more bad decisions. In the end, a few good men and women loose their jobs while he/she (our VP in this case) keeps driving his leased beemer for a little while longer…

Guy Kawasaki has another great post on the The Art of Firing which follows The Art of the Layoff. Here are some thoughts (in top-10 format out of respect for Guy): Do your homework (be fair, reasonable and rational) Sleep on the termination decision be…

I agree with the comments about the small severance package. A small package means rehiring will be very hard, and it sends a pretty clear message to current employees. It also means that there may be a vengeful ex-employee waiting out there.
Some will like the message (presumably Guy would) the small package gives, others won’t.

Friday is not a good day, at all, to fire people who work for you. Especially someone who is close to retirement and/or has given 20+ years to the company. Unless all you care about is accounting cleanliness, do not fire on a Friday. If you do, I hope you never gain empathy from a similiar life experience.